Capital Formation and Capital Stock in Indonesia, 1950-2007

This paper presents long-term estimates of gross fixed capital formation for 1951-2007 that are disaggregated by categories of productive assets. These data, combined with approximations of probable average asset lives and a feasible asset retirement method are used in a Perpetual Inventory Method to estimate gross fixed capital stock in Indonesia for 1950-2007 disaggregated by productive assets. Most of Indonesia’s capital stock long consisted of residential and non-residential structures. Total capital stock grew significantly since the late-1960s at about 10% per year, until the 1997-98 economic crisis. The high capital-output ratio in 1997 suggests that part of Indonesia’s high economic growth during the 1990s was due to unsustainable resource accumulation.